Abraham v. State Farm General Insurance Company

Background

Lior Abraham purchased a renters policy covering February 28, 2018, through February 28, 2019, and a personal liability umbrella policy covering March 11, 2018, through March 11, 2019. In May 2020, Abraham’s counsel asked State Farm to provide a defense and indemnity after Abraham was accused of sexual assault and sexual misconduct involving Jane Doe. Doe later sued Abraham in San Francisco County Superior Court, asserting claims including assault and battery, sexual assault and battery, negligence, harassment, and emotional-distress claims.

State Farm denied coverage for Abraham’s pre-lawsuit claim in September 2020 and asked him to notify State Farm if he received a complaint and to provide the pleadings. The opinion states that State Farm received no further communications from Abraham until he filed this lawsuit. Abraham incurred $347,908 in defense fees and paid $740,000 to settle Doe’s claims. He then sued State Farm for breach of contract, bad faith, and declaratory judgment, alleging that State Farm breached its duty to defend him.

Summary-judgment motions

Both parties moved for summary judgment, a procedure allowing judgment without a trial when there is no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. The court also excluded an expert declaration Abraham submitted with his reply because he had not disclosed the expert by the deadline and had not argued that the violation was justified or harmless. The court also excluded the evidence because Abraham first presented it on summary judgment.

Coverage analysis

The renters policy required State Farm to defend a claim or suit seeking damages for covered bodily injury or property damage caused by an “occurrence.” The umbrella policy similarly required a defense for a suit seeking damages for a covered loss. Both policies defined an occurrence or loss as an “accident” resulting in bodily injury or property damage. The policies’ definition of bodily injury excluded emotional distress and similar injuries unless arising from actual physical injury.

Applying California law, the court explained that an accident is an unexpected, unforeseen, or undesigned happening or consequence. The relevant focus is the insured’s conduct for which liability is sought, not merely whether the insured intended the resulting injury. An intentional act does not become an accident simply because the insured did not intend harm or mistakenly believed the other person consented.

The court found it undisputed that Abraham intended to remove Doe’s sweatshirt, intentionally engaged in sexual intercourse with Doe, and intentionally touched Doe between her legs. Because Abraham intended the outcomes of his actions, the court held that none of the incidents was an accident under California law, regardless of whether he believed Doe consented. The court therefore concluded that Doe’s claims were not covered by either policy.

Ruling

Because Doe’s claims were not covered, they did not trigger State Farm’s duty to defend. The court held that State Farm therefore did not breach its contractual obligations to Abraham. The court also held that State Farm did not act in bad faith because there was no potential for coverage, and that Abraham was not entitled to declaratory relief.

The court denied Abraham’s motion for summary judgment and granted State Farm’s motion. It directed the Clerk to enter judgment and close the file.